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ICAI views on recent order issued by SEBI-Satyam case

Friday, January 12, 2018

With regards to ban imposed by the Securities and Exchange Board of India (SEBI) over the Satyam case, The Institute of Chartered Accountants of India would like to inform that ICAI was the first to be off the blocks when the Satyam matter broke out in January 2009. ICAI had initiated disciplinary cases against 6 members concerned and despite several legal hurdles and other impediments like the Respondents were in judicial custody, ICAI had proceeded with its disciplinary process in terms of the CA Act and the Rules framed there under. The ICAI had awarded the maximum penalty of removal from membership permanently and imposition of monetary penalty on members of ICAI involved in the matter.

ICAI was the body which concluded its disciplinary enquiry at the earliest amongst Domestic / International agencies / bodies within 3 years by the year 2012 and disposed off the matter by award of punishment by the year 2013 which stands as testimony to the efficacy of the disciplinary mechanism as a whole apart from the urgency and seriousness with which ICAI deals with disciplinary matters involving high public importance/corporate governance.

The punishment awarded by SEBI is only a reiteration of the verdict passed by the Disciplinary Committee of ICAI except that while the ICAI had punished the concerned members, however the SEBI has imposed this punishment on the audit firm concerned.

Under the present provisions of the Chartered Accountants Act 1949, there are no powers presently vested with ICAI for taking action against CA firms. The ICAI has already sent its recommendation in the year 2010 to the Ministry of Corporate Affairs for making amendments in the Chartered Accountants Act, 1949 to enable taking disciplinary action against CA firms.

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The Institute of Chartered Accountants of India (ICAI) is a statutory body established by an Act of Parliament, viz. The Chartered Accountants Act, 1949 (Act No.XXXVIII of 1949) for regulating the profession of Chartered Accountancy in the country. The Institute, functions under the administrative control of the Ministry of Corporate Affairs, Government of India. The ICAI is the second largest professional body of Chartered Accountants in the world, with a strong tradition of service to the Indian economy in public interest.